The Telangana High Court has quashed the show-cause notice demanding tax already settled by the petitioner/assessee under the Amnesty Scheme.
A Division Bench of Justice Sujoy Paul and Justice Namavarapu Rajeshwar Rao has allowed a writ petition challenging the legality and validity of a show-cause notice demanding tax already settled by the Petitioner under the Amnesty Scheme of the State Government. Consequently, the Show Cause Notices seeking to reassess or revise the tax liability that stood settled by way of an Amnesty scheme were quashed.
The Assessment Order was issued by the Assistant Commissioner confirming the demand of Rs.3,25,87,464 for the period 2015-16, 2016-17 and 2017-18 (up to June 2017). On 28.11.2020, an order was issued by the Assistant Commissioner (CT), Audit, Begumpet Division, Hyderabad, demanding a penalty of 25% on the tax demand.
The petitioner preferred appeals before the Appellate Deputy Commissioner challenging the A.Os issued demanding Value Added Tax (VAT) and penalty and pre-deposited an amount equivalent to 12.5% of the tax and penalty, which was increased to 50% of the demand of tax and penalty.
The One Time Settlement (OTS) schemes dated 09.05.2022, 25.06.2022 and 04.07.2022 were launched by the Government of Telangana vide G.O.Ms.Nos.45, 61 and 71 respectively, to enable the taxpayers to settle the disputed tax amounts under the Telangana Value Added Tax Act, 2005 (VAT Act) and the Central Sales Tax Act, 1956 (CST Act).
The petitioner preferred an application showing its willingness for availment of OTS scheme pursuant to assessment order. The Audit Officer wrote a letter to the respondent department indicating a short levy of tax and penalty.
On 16.08.2022, the petitioner deposited the desired amount. The show cause notice came as bolt from blue to the petitioner by which the department on the strength of objections raised by Auditor General – Audit, proposed a raise in demand to the tune of Rs.7,58,43,382/-. In turn, the petitioner filed a detailed response on merits and also raised objections that after having entered into the OTS, it is no more open to issue show cause notice.
The petitioner primarily challenged the show cause notices are twofold.
Firstly, the Impugned notices issued were wholly without jurisdiction in as much as they proceed to re-open the assessment proceedings without making reference to any provision of law, pursuant to which a concluded assessment (settled through Amnesty scheme) were proposed to be revised/reopened by the Respondents.
Secondly, the Impugned notices have been issued in the teeth of the benefit extended to the Petitioner vide the Amnesty scheme in as much as they proceed to raise a fresh demand of tax and penalty for the very same Assessment Orders and the same period as were covered under the said Scheme.
The Petitioner argued that the benefit of the Amnesty scheme was made available to the Petitioner only after a thorough scrutiny of the application of the Petitioner was undertaken by a competent committee. Additionally, during this period, while the application for Amnesty scheme application was pending, the Respondent was informed by the Audit Officer of the alleged short levy of tax and penalty by the Petitioner. Despite this, the application was accepted, and the benefit granted, exonerating the Petitioner from any remaining tax liability, interest, and penalty.
The court quash the notices and passed a detailed order comprising vital observation on the aspect of the object and scope of an Amnesty Scheme introduced by the government.
The court held that once an assessee has successfully entered into an Amnesty scheme, the assessing authorities are barred from re-agitating issues and liabilities that have been conclusively settled under the Amnesty scheme in as much as “curtains were finally drawn by the respondents by entering into OTS.” It was also observed that if such reassessment or revision post-Amnesty is allowed, as sought by the Respondents, it would defeat the very objective of such schemes and heavily discourage taxpayers from entering into these one-time settlements.
Case Title: ACME Cleantech Solutions Private Limited Versus Deputy Commissioner (ST) STU-1
Case No.: Writ Petition No. 3194 of 2024
Date: 28.08.2024
Counsel For Petitioner: Advocates Ms. Mannat Waraich, Ms. Jaya Rishi and Mr. Aly Ahmed Basith.
Counsel For Respondent: Swaroop Oorilla
